Highest number of first time buyers in 15 years

As low-deposit mortgages have become increasingly available, the number of people taking their first step onto the property ladder reached its highest level in 15 years.

408,379 people were estimated to have bought a property with a mortgage last year, with economists pointing to low-deposit home loans as an “enabler” for the trend. It is the first time the total has passed the 400,000 mark since 2006 when 400,900 first-time buyers were recorded. However, Yorkshire Building Society, who made the calculations, said it was unlikely that first-time buyer numbers would continue to be seen at this level in 2022 and beyond. 

According to the Yorkshire Building Society, last year first-time buyers across the UK accounted for 50 per cent of house purchases with a mortgage, up from 36 per cent in 2007. The analysis was based on lending figures from trade association UK Finance upto October 2021. The first-time buyer total last year increased by about 35 per cent compared with 303,000 in 2020. A previous first-time buyer peak was reached in 2002 when 531,800 people took their first step onto the housing ladder. Last year’s total is more than double the number in the aftermath of the financial crisis in 2008 when the figure was 191,000, the Yorkshire Building Society said. 

House prices generally have surged to record highs over the past year, presenting a potential obstacle to those trying to get on to the property ladder. The price of a typical first-time buyers home increased by 9 per cent to £222,997 in the year to October. A year earlier, the average first-time buyer home had cost £204,230 — £18,767 less. Low mortgage rates are helping to keep payments on home loans relatively affordable, it has been suggested.  

Strategic economist at Yorkshire Building Society, Nitesh Patel said: “The performance of the first-time buyer market in 2021 had been extraordinary, particularly against the backdrop of uncertainties caused by the lockdown in the early months of the year. There are some strong drivers of demand that explain the increased volumes. Low borrowing costs is an important factor and the increased availability of more low-deposit mortgages has also been an enabler mostly for first-time buyers. In the near term, housing demand will continue to exceed supply. However, with prices at an elevated level in comparison to local earnings, this should dampen activity,” he added.